Stocks came into the week on their heels from the recent pullback and the horrific terrorist attacks in Paris. In my previous post, I offered that the odds favored some more weakness with a reversal this week. The market saw a quick bout of weakness to open the week, but quickly reversed into a very strong day for the bulls on Monday. While Tuesday saw some internal soft spots, the bears will have a tough time taking control unless stocks close below Monday’s low.
At this point on the index side, we need to pay close attention to the leader. Bulls like me do not want to see the Dow taking charge over the other major indices. I remain of the opinion that all-time highs are not too far away.
On the sector front, I am loving the action in consumer discretionary, transports, internets and industrials. I can’t tell you how many times I hear financial reporters or pundits say that industrials can’t rally with a strong dollar. Clearly, these people never do their homework because it’s happened many times before and right now as well!
High yield bonds remain a concern, but perhaps Monday’s reversal will give them some upward energy. I am not ruling out that this canary in the coal mine already peaked for this bull market and will assume a laggard role until the next bear market hits.
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